This article was originally published in the January/February 1993 issue of Home Energy Magazine. Some formatting inconsistencies may be evident in older archive content.

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Home Energy Magazine Online January/February 1993

FIELD NOTES

News of local, state, federal and utility programs

Affordable Housing Through Efficiency

by Paul Knight

The Department of Housing and Urban Development generally defines affordable housing as a place to live that costs no more than 30% of the occupant's income, including utility costs. Typically we achieve affordable rents or mortgages--the major housing costs--by keeping construction costs down. Yet often the program excludes energy efficiency measures in an effort to meet this goal. What good are affordable mortgages or rents, if the tenants can't afford the energy bills?

In Chicago we have an abundant supply of older, masonry, three-story, walk-up, multifamily buildings. Referred to as Chicago-style buildings, they range in size from six units to over 50 units. Many of them are being rehabilitated by non-profit community development corporations as low-income housing. They place an emphasis on keeping rehab costs down--around $50,000 per unit.

A substantial rehab job typically includes demolition of most plaster and lath, new plumbing, electrical, and mechanical systems, new windows and wall finishes, and a new roof. The only energy conservation work typically involves attic insulation (R-19 or R-30), new windows (double glazed), and a new boiler or else boiler repair. Resulting annual energy costs are $687-$857 per unit.

The goal of the Illinois Department of Energy and Natural Resources (ENR) is to reduce ongoing energy costs for low-income households who will occupy these rehabbed buildings. Working with Henry Kurth and Maureen Davlin of ENR, we have integrated Super Insulation (SI) building practices in the rehab process. Here SI means high insulation levels, an emphasis on indoor air sealing, and high efficiency heating systems. ENR funds the incremental cost to upgrade to SI. Our investment for this upgrade is typically $2,000-$2,500 per unit. Annual energy costs are $135-$475 per unit with a payback of 4-8 years. Thus, for an additional investment of under 5%, energy costs are reduced 31-85%.

This SI demonstration program is in its fourth year. Since its inception, we have included SI in the rehab of seven multifamily buildings (98 units). One building (15 units) is currently under construction. We hope to begin another seven buildings this year. Here are some of the program's unique technical features:

Insulation

Exterior walls are built out with 2 2 4 framing, using either wood or metal studs. The new framing is floated 1-2 in. away from the exterior wall to keep the new wall away from imperfections in that existing wall (see Figure 1). Instead of a standard 31/2 in. batt (usually R-11), we pack the wall cavity with an R-19 batt. This compresses the batt, but completely fills the wall cavity. The drywall is continuous from floor to sub-floor, rather than floor to ceiling. This achieves better air sealing in the rim area (ceiling/floor cavity).

Indoor Air Sealing

We have two indoor air sealing objectives: sealing the units from the exterior, and sealing each unit from all other units in the building. In other words, all penetrations, cracks and openings in floors, ceilings and walls are sealed with foam or caulk. Our goal is to reduce air leakage to 1,100 ft3 per minute with the unit depressurized to 50 Pascals (CFM50) or about 0.5 air changes per hour (ACH natural). However, to prevent indoor air quality problems, we install exhaust fans in bathrooms and require exhaust hoods on stoves.

The first sealed joint is between the masonry wall and the subfloor, created as a result of furring strips extending down past the subfloor. This joint becomes exposed when the baseboard is removed and can be sealed with foam (see Figure 1).

The second key sealing point is at the drywall and framing. We apply a sealant to the perimeter of the drywall as the drywall is being installed. By extending the drywall to the subfloor of the unit above rather than stopping at the ceiling, we are able to achieve our seal in the rim area. We then caulk the base of the drywall to the subfloor and the top of the drywall to the ceiling joists/subfloor.

Finally, we seal all conduit penetrations, plumbing penetrations, and other miscellaneous penetrations in the floors, walls, and ceilings (recessed medicine cabinets, panel boxes, ceiling fixtures, and so on).

Surprisingly, despite all this air sealing, we end up with air leakage rates around 1,100 CFM50 when measured with a blower door. Undoubtedly we are pulling air from surrounding units, but we haven't done testing to determine how much.

Heating Systems

Five of the completed SI buildings have individually heated apartments. The other two buildings have central heating. We used the Mor-Flo Integra and Mor-Flo Polaris heating units in one of the buildings with individual heating. These units combine water heating and space heating. After two winters with these units, space heating energy consumption is around 5 Btu/ft2-deg.F with an average fuel bill of approximately $135 per year. In the first heating season, due to problems with them, Mor-Flow replaced all of the ignition systems. The second heating season saw no problems with the heaters.

We installed furnaces with Annual Fuel Utilization Efficiencies (AFUE) of 90% in four newly completed buildings, each with a central domestic hot water supply system. (We will evaluate energy consumption in these buildings next spring.) It is absolutely critical when using individual heating appliances in these buildings that they are direct vent, sealed combustion units. Combustion air must be drawn from the outside, given the air sealing measures in these buildings.

A modular hot water heating system was used in the centrally heated buildings. Energy performance in these two buildings was 10-14 Btu/ft2-deg.F with average annual unit fuel costs of $350-$475. Although not as good as the building with individual heating, these buildings represent a significant improvement over what is achieved in a typical rehab.

A Case Study In Affordability

The three-bedroom units were quite large--1,500 ft2--and rent was set at $475 per month. The specifications called for R-19 attic insulation and furnaces with AFUE of 68% in each unit. Sidewall insulation and indoor air sealing were not included. The non-profit developer, although very interested in the SI program, couldn't afford to put any more money into the building. That is, if we couldn't upgrade to SI with the $2,000-per-unit ENR grant, the developer couldn't afford to borrow the balance needed to do the work.

We did cash-flow analyses with and without the SI work (see Table 1). We estimated annual heating costs to be $1,320 (29 Btu/ft2-deg.F), or $110 on a monthly budget plan. Monthly housing costs would be $585 (rent plus utilities). According to the definition of affordable housing, the prospective tenant's annual income must be at least $23,400. (Rent plus utilities must not exceed 30% of income.)

We analyzed the same building again, this time with SI included. Attic insulation was increased to R-43. Walls were furred out with 2 x 4 framing and insulated to R-19. Drywall was installed from floor to subfloor and sealed to the framing, among other indoor air sealing measures. Low-emissivity, double glazed windows were installed. Finally, Polaris combination water and space heaters were installed in each unit.

The incremental cost was $4,000 per unit--quite a bit higher than the $2,000-$2,500 that it usually takes to upgrade to SI. But the units are much larger than the average for multifamily buildings and essentially no conservation measures were included in the original case.

Assuming that the ENR grant program did not exist and that the developer was able to borrow $4,000 per unit as part of the construction loan and that the construction loan was secured at 8% over 30 years--an additional $4,000 per unit would increase the monthly mortgage payment by $30 per unit. To cover this investment (plus a little extra), the rent must rise by $35, from $475 to $510.

With the SI work, the yearly energy costs dropped to $456 (10 Btu/ft2-deg.F), or $38 per month on a budget plan. Monthly housing costs dropped to $548, even though the rents increased. Net savings in housing costs between the proposed rehab and the SI rehab dropped by $37. Annual minimum income of prospective tenants fell by $1,480, to $21,920. In essence, we created affordable housing for people with lower incomes by lowering utility costs, even though we raised the rent in the process. Remember, this analysis was in done in absence of the ENR grant program; the numbers are even better if the developer only has to borrow $2,000 per unit. (The developer, after seeing this analysis, is in the process of doing exactly that.)

Developers of affordable housing have good intentions, but in an effort to minimize construction costs, energy efficiency is often sacrificed. Rather than an added expense, energy efficiency should be viewed as a tool that helps create and maintain affordable housing.